Answer the question on the basis of the following information for a bond having no expiration
date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest
rate = 10 percent.
A. fall to 9 percent.
B. fall to 8 percent.
C. rise to 11 percent.
D. rise to 12 percent.
ANSWER
B. fall to 8 percent.